Making Big Decisions and Mastering the Consequences

My father-in-law Don McFadden told me a story about a big mistake he once made. He bought an apartment building in his city and borrowed most of the money to do it. After he took ownership, he learned that many of the tenants were moving out and there was no way to stop them, because they had never signed leases.

He was facing an emptying apartment building and a large monthly mortgage payment – a bad combination. Worse, he got surprised: he hadn’t done the research to know that it was coming.

So, how did it turn out? It turned out just fine. It turned out better, in fact, than if he had never done the deal in the first place. He and my mother-in-law re-negotiated their loan with the bank. They took the opportunity to clean and paint the vacant apartments, and were able to fill them with tenants of their choice, for higher rents. And one-year leases. My in-laws owned that building for 30 years.

In a similar vein, James McCann, the founder of 1-800 Flowers, related this story about the early days of his company:

In 1986 I bought the assets of a failed floral company in Texas called 800-Flowers and took that name. I thought I was smarter than everyone else and neglected to hire lawyers and bankers to do due diligence. I unknowingly signed for all liabilities, which I later learned was a debt of $7 million. People advised me to file for bankruptcy. Then my grandmother took me aside and said: “This bankruptcy thing? We don’t do that. Find another way.”

And he did. The Texas company’s sterling assets were its name and its 1-800 number. McCann built his company around technology – first phone ordering, then the internet – to upend the floral-delivery business and create a market leader with over $600 million in annual revenues.

We often confront situations where we have to make a decision without all the information we’d like to have. Do we jump? Or wait and see?

Many of us err on the side of “wait and see,” using due diligence as a way to put off risk, or to avoid it completely. Yet, the above stories tell us that even big mistakes can turn out successfully. It all depends on your mindset:

1. Don’t just focus on the downside; understand the opportunity.

Keep in mind that it’s not easy to look at both sides of a situation. In fact, as discovered by pioneering behavioral economists Amos Tversky and Daniel Kahneman, we are wired to value losses higher than equivalent gains. The classic, two-column “Pros and Cons” list can be helpful here. Bad things will be easier to think of than good ones – try to come up with an equal number of items in each column. How do they stack up?

2. Understand that you will shape the outcome.

When you make a decision, you don’t just sit back and see how things unfold; you will actively engage to help ensure success. Ironically, when you start off the wrong way, as Don McFadden and Jim McCann did, you become even more committed to turning it around – your reputation and pride are on the line.

3. Know who you can rely on.

In Don McFadden’s case, he found he had several partners in his predicament. His wife Sheila became a crucial sounding board and source of creative solutions. The bank that had lent him the money had a stake in his success as well. By working with him to revise the terms of his loan, the bank was a crucial enabler that led to the long-term success of the apartment building. With regards to your decision, who is on your team? Who will help you if things go wrong? Your family, close friends, business partners are all candidates.

4. Stick with it.

In her outstanding book Mindset, psychology researcher Carol Dweck discusses the trait that both McCann and McFadden had in spades, and that you will need to make your decision into a long-term success, no matter what happens:

Exceptional people seem to have a special talent for converting life’s setbacks into future successes. Creativity researchers concur. In a poll of 143 creativity researchers, there was wide agreement about the number one ingredient in creative achievement… perseverance and resilience.

Most of our decisions have limited risks and rewards. Nevertheless, if we know that with hard work, perseverance, and resourcefulness we can make even a bad situation into a success, we can approach any decision we face with that confidence. As my father-in-law said about his experience buying that apartment building: “Failure is an opportunity.”

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John Caddell

Interesting article, really useful writeup this is and learn lots of things to tackle the situation where decision would change your whole mind.

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Nice!~

Michael Lockett

Thank you for the great article.Helpful to those of us starting up our own start ups.

jmcaddell

Thanks, Michael, good luck with your startup, but even more than luck, I wish you persistence and resilience!

regards, John

Maicon

Perseverance is a word that I’m reading a lot lately. Is vital for entrepreneurs have this feature.

Lauren Saunders

Really enjoyed this. Thank you.

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Real masters of the word!

CowboyUpMedia

The thing I love about entrepreneurship is that I get to *practice taking risks just about everyday. Especially as a bootstrapper where each new ‘bet’ – is with my own profits (from previous successful ‘bets’).

You can’t earn that thick skin any other way imho.

Will check out Mistake Bank – looks like my kinda site.

Cowboy

Denise W. Barreto

OMG – did you know I’ve got two huge decisions to make in the next few weeks? You must. What a great, timely read and you nailed it. As a new business owner – two in fact – this is critical thinking for every move and I love the simplicity of your post. Will be sharing with my tribe… thanks

Jonathan Patterson

I’m resourceful and creative. Those two traits have propelled me throughout my entire life. I also never look at things that didn’t work out as I expected as failures. I see them as a necessary step to get to the end result. Learn from them and don’t repeat!

Nora Reed

This is really a useful article. this would also gonna help me in my Graphic n logo design business! i hope for more article!

jmcaddell

Thanks, Denise. I hope your two decisions work out perfectly, but if they don’t, I hope they’re what Paul Schoemaker terms “brilliant mistakes” – things that don’t work out at first, but over time prove their worth.

regards, John

Mayan Balon

Persistence and resilience. Very well written. Designers do experience a lot of failures and big decisions everyday. Will carry these two words for the rest of my career. Thank for the wonderful article.🙂

freshtight

I like to look at the big picture before I take a big risk. Sometimes I calculate or analyze more than in past decisions, but as the Mindset author mentioned – Perseverance & Resilience – great words to work by.

Alex Maier

Very true! Great short story, thanks!

Jane Pellicciotto

I think the key is that as long as you’re not a reckless person and you are guided in general by your values, intentions, interests, etc., then it almost always makes sense to jump in and figure the details out later. Partly because we can’t ever know what all the details and consequences are going to be.

A woman I knew left her finance job to open a bakery (her dream work) but she had to close the business. To me, it wasn’t a failure. It was a success because, A) she followed her dream, and B) she was smart enough to know when to bail.

Monique C Toro

Thank you sooo much I needed to read this desperately…I’m writing the quote “failure is an opportunity” on my inspiration board.

jmcaddell

It will be interesting to see where your baker friend is in 5 years. Sometimes the aftereffects of a “mistake” aren’t fully apparent for some time. Will she be regretting she hadn’t stayed at her finance job, or will she be in a totally different and fascinating place?

Angelina Sereno

I go with my gut. It’s tough because sometimes you create big change and lists of to-do’s… but in the end your intuition is always right. I’m in my 6th year of business and things are really moving forward in the right direction. I trust that my most recent BIG decisions are the best I have made yet!! I’m so excited to see what the new year brings!

dive in, head first, no success ever comes without risk and you will never know that you are actually capable of if you don’t give it your all.

Sherry

The problem with a story like this is that it only focuses on the successes … where statistically, most people who take big risks fail. Most people actually do benefit from research and calculation and really mulling something over before making a leap. There’s very few people out there that can turn around an epic fail into a multimillion dollar success.

Other than that, the points of course are good because they can be applied to a lot of things in life, not just the big decisions.

Seanine

I enjoyed the story and the message. Sometimes, we do have to step out on faith in order to realize our dreams. If we waited until everything was perfect, we would never act. Gonna hold on to this post because it is encouraging and hopeful🙂

mnesart

It seems very wonderful article ..Thank you ..

Chris Waind

I can remember when I was fired from quite a prestigious job in Canada. Looking back it was the best thing that happened to me. I had gotten lazy and off the track of what I loved doing. It hurt like mad at the time, but with a bit of humility and objective perspective, it has kept me grounded for future successes. I also don’t think you should fire anyone else if you haven’t been fired yourself. Empathy is need in this business.